U.S. Manufacturing, Faith in Economy Drops in January

Washington, D.C.–Government data released Friday indicated manufacturing was faltering along with consumer confidence in the U.S., TheNew York Times reports.Oil prices pushed import costs up 1.7 percent in January, a 13.7 percent rise compared to January 2006–the highest annual rate since 1983. Expensive gas is also hurting consumer spending as people continue to reduce the amount of nonessential items they buy, the Times said. Imported petroleum prices rose 67 percent from a year ago, according to the Labor Department.The Empire State Manufacturing survey, which measures New York’s business conditions, dropped to negative levels in February–minus 11.7–its lowest reading since April 2003, the Times said. In addition, consumer confidence in the economy is at its lowest level since the 1990s recession era, according to a national survey. The Reuters/University of Michigan survey–which is a closely watched gauge of consumer confidence–dropped from 78.4 last month to 69.6 in February.However, not all sectors declined. Industrial production saw a 0.1 percent gain last month.Still, the overall growth decline could inspire another Federal Reserve benchmark interest rate cut; however, the increased import prices could indicate that inflation is on the rise, making a rate cut less certain, according to the Times.